DCIT 2(1), MUMBAI V. DEUTSCHE ASSET MANAGEMENT (INDIA) P.LTD, MUMBAI

ITA 789/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92968 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 06-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing
• Section: 143(3)

Judgement Text

K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ./ I.T.A. NO.789/ MUM/2014 ( / ASSESSMENT YEAR : 2009-2010 DCIT 2(1), R NO. 561, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S DEUTSCHE ASSET MANAGEMENT (INDIA) PVT. LTD., 222, KODAK HOUSE, D.N. ROAD, FORT, MUMBAI 400001. ./ PAN : AABCD5226D ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY SHRI PADMANABHAN R E SPONDENT BY : SHRI NIRAJ SHETH / DATE OF HEARING : 07-04-2015 / DATE OF PRONOUNCEMENT : 12-06-2015 [ !' / O R D E R PER B.R. BASKARAN, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ASSESSMENT ORDER DATED 6-12-2013 PASSED BY THE A.O. U/S 143(3) R.W.S. 144C(13) OF THE ACT IN CONFORMITY WITH THE DIRECTIONS ISSUED BY THE DISPUTE RESOLUTION PANEL - 1, MUMBAI (DRP). 2. THE REVENUE HAS AGGRIEVED BY THE DECISION OF DRP IN DELETING THE ADJUSTMENT OF RS. 1.50 CRORES MADE BY THE TRANSFER PRICING OFFICER (TPO). 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING INV ESTMENT ADVISORY AND MARKETING SUPPORT SERVICES. THE ASSESSEE COMPANY PR OVIDED ADVISORY SERVICES ITA 789/M/11 2 TO ITS ASSOCIATED ENTERPRISES (AES) NAMED DEUTSCH E ASSET MANAGEMENT (ASIA) LIMITED (IN SHORT DAMAL), SINGAPORE. DAMA L IS A FUND MANAGER FOR DEUTSCHE INDIA EQUITY FUND. IN CONSIDERATION FOR PR OVIDING SUCH ADVISORY SERVICES, DAMAL HAS GIVEN 50% SHARES OF THE FEES RE CEIVED BY IT TO THE ASSESSEE. THE TPO NOTICED THAT THE ASSESSEE HAS REC EIVED SHARE OF 70% OF THE FEES FROM ANOTHER AE, GERMANY FOR PROVIDING LIAISON ING/MARKETING SUPPORT SERVICES TO IT. THOUGH THE ASSESSEE HAD BENCH MARK ED THE TRANSACTIONS UNDER TNMM WITH NET COST PLUS MARGIN, THE TPO HELD THAT T HE SAID METHOD IS NOT ACCEPTABLE. THE TPO FURTHER HELD THAT THE ASSESSEE SHOULD HAVE TAKEN SHARE OF 70% OF FEES FOR ADVISORY SERVICES PROVIDED TO DA MAL ALSO. ACCORDINGLY, HE PROPOSED TO ADJUSTMENT OF RS. 1.50 CRORES TO THE IN COME RETURNED BY THE ASSESSEE. 4. BEFORE THE LD. DRP, IT WAS CONTENDED THAT THE TP O HAS PROPOSED ADJUSTMENT BY USING A CONTROLLED TRANSACTION ENTERE D BETWEEN THE ASSESSEE AND ITS AE IN GERMANY TO BENCHMARK ANOTHER CONTROLL ED TRANSACTION ENTERED INTO BY THE ASSESSEE WITH ITS AES AT SINGAPORE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS PROVIDING ADVISORY SERVICES TO DAM AL, SINGAPORE WHICH IS FUNCTIONALLY DIFFERENT FROM THE LIASIONING/MARKETIN G SUPPORT SERVICES PROVIDED TO ANOTHER AE LOCATED IN GERMANY. THE LD. DRP AGRE ED WITH BOTH THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY DELETED THE TRANSFER PRICING ADJUSTMENT PROPOSED BY THE TPO. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AN IDENTICAL ADJUSTMENT MADE IN THE ASSESSEES OWN CASE IN A.Y. 2006-07 CAME TO BE CONSIDERED BY THE CO-ORDINATE BENCH OF T HIS TRIBUNAL IN ITA NO. 7717/MUM/2010 AND THE TRIBUNAL VIDE ITS ORDER DATED 12-12-2012 HAS GIVEN A CLEAR FINDING THAT THE FEE RECEIVED BY THE ASSESS EE FOR PROVIDING MARKETING AND LIASIONING SERVICES CANNOT BE EQUATED WITH THE ADVISORY SERVICES GIVEN TO AN INVESTMENT MANAGER. ACCORDINGLY, THE TRIBUNAL S ET ASIDE THE ADJUSTMENT ITA 789/M/11 3 PROPOSED BY THE TPO, WHICH HAD ALSO BEEN CONFIRMED BY THE LD. DRP IN THAT YEAR. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUB MITTED THAT THE TPO, IN THE SUBSEQUENT YEARS, HAS ACCEPTED THE FACT THAT THE SE RVICES PROVIDED TO AES LOCATED IN SINGAPORE AND GERMANY ARE DIFFERENT AND ACCORDINGLY DID NOT PROPOSE ANY ADJUSTMENT IN ASSESSMENT YEARS 2010-11 AND 2011-12. 6. THE LD. D.R. DID NOT CONTROVERT THE FACTUAL ASPE CTS PRESENTED BY THE LD. COUNSEL FOR THE ASSESSEE. 7. WE FURTHER NOTICE THAT THE LD. DRP HAS FOLLOWED HIS DECISION RENDERED BY IT IN A.Y. 2008-09 IN DECIDING THE ISSUE IN FAVO UR OF THE ASSESSEE. WE HAVE ALREADY SEEN THAT THE TRIBUNAL, IN ASSESSMENT YEAR 2006-07, HAS GIVEN A FINDING THAT THE SERVICES PROVIDED TO AE, SINGAPORE CANNOT BE EQUATED WITH THE KIND OF SERVICES PROVIDED TO AE, GERMANY. ACCO RDINGLY THE CO-ORDINATE BENCH HAS DELETED THE TP ADJUSTMENT MADE IN AY 2006 -07. SINCE THE FACTS AND CIRCUMSTANCES OF THE ISSUE ARE IDENTICAL IN THE INSTANT YEAR ALSO, BY FOLLOWING THE ORDER PASSED BY THE TRIBUNAL IN THE H ANDS OF THE ASSESSEE FOR AY 2006-07, WE UPHOLD THE ORDER OF LD. DRP ON THIS IS SUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JUNE, 2015. !' # $% &! ' 12-06-2015 ( ) SD/- SD/- (D. MANMOHAN) (B.R. BASKARAN) VICE PRESIDENT ACCOUNTANT MEMB ER $ 4 MUMBAI ; &! DATED 12-06-2015 [ .5../ RK , SR. PS ITA 789/M/11 4 ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. THE DRP, CONCERNED, , MUMBAI 4. TPO, MUMBAI 5. 67( 5589 , 89 , $ 4 / DR, ITAT, MUMBAI K BENCH 6. (;< = / GUARD FILE. ' / BY ORDER, 6 5 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 4 / ITAT, MUMBAI